Gambling is all about the odds of separating you from your money and todays gambling machines are making lots of it for the government. Ben Alexander returns to discuss the Pokies.
Welcome to Pragmatic. Pragmatic is a weekly discussion show contemplating the practical application of technology. Exploring the real-world trade-offs, we look at how great ideas are transformed into products and services that can change our lives. Nothing is as simple as it seems. This episode is sponsored by LIFX. Visit lifex.co/pragmatic for more information and to take advantage of a special discount off their amazing LED smart bulbs exclusively for Pragmatic listeners. I'm your host John Chidjie and joining me once again today is Ben Alexander. How are you doing Ben? How are you doing John? Cool. I would like today to talk a little bit about gambling. Are you a gambler Ben? I'm not much of a gambler, but at the same time, I'm actually up like over my lifetime. I've made more money gambling than I've lost. So, I don't know. Does that make me a gambler? It makes you a statistical outlier, but it's still a good position to be in, man. Slightly lucky. Yeah. I'll take it, right? Why not? So, I'm kind of glad you said that though, because one of the problems with this topic is that some people get very polarized about it and the reason I want to talk about it is because I guess I'm a little bit polarized about this but I guess I just would just dive into it and maybe it'll make sense by the time we get to the end. Polarized like morally polarized? Yeah I think yeah morally polarized, yes. Yeah people get really yeah okay. Yeah because there's some people that are just like religiously like a religious against like gambling is evil. - Well, yeah, literally religiously. - Oh yeah, very literally. And whereas other people, you know, have no issue with it. And of course, then you've got the people that have problems with gambling or gambling addiction. And of course, I guess that's the whole spectrum. But anyway, so I think it's an interesting topic worth talking about, especially considering that one of my jobs that I've had in my life to date has been as a statistician. I mean, it was reliability statistics, but it was still statistics. And it never ceases to make me giggle a little bit on the inside, considering that I nearly failed statistics when I was at university. And my first job when I was working was over in Canada, actually with Nortel, was doing statistics. So I kind of found that amusing. And another little side note, another subject that I only just passed was control systems. And guess what I ended up doing and what I'm still doing? Yes, okay, refer-- It tells you something though, that's kind of scary. Doesn't it? Doesn't that tell you what we were talking about on episode 10 about academic proof? Come on. So what does that prove to you? But we cannot dredge up that. You wasted time in all those other classes that you got A's in? I haven't used a whole bunch of those ones that I got A's in. So there you go. Anyway, whatever. I'm risking more feedback about email John. Okay, right. Okay, right. So, okay, gotta start as I always do, talking about what the hell gambling is. Well, not gambling, the topic is exactly, define it. So let's start by defining what gambling is. So gambling is the wagering of money or something of material value, often referred to as the stakes, and I'm doing that in air quotes. On, sorry? - The stakes. - The stakes, yes. Not ones you eat. On an event with an uncertain outcome with the primary intention of winning additional money and/or material goods." So, a bit long-winded, but that's the definition. So, in order for gambling to be considered gambling, it therefore requires three elements; consideration, chance, and a prize at the end of some kind, a description. One of the other little asides before I go any further though, that I want to mention is one of the things my grandmother said. My grandmother did not believe in insurance. She said that insurance is a form of gambling. And she also did not believe in gambling. The difference, I guess, with insurance- - Kind of is a form of gambling. It's a reverse gambling. - Yeah, it is. It's weird, isn't it? If you think about it, it has a lot of things in common with gambling 'cause you're paying money to someone else as protection against an event that might happen. But if it doesn't happen, you'll never see that money back. - Right. - So it's- - Which is part of our, we're risk averse as humans. So we fall for that. - Yeah, we do. It's fear, right? 'Cause I'm afraid I'm gonna lose something that I value. - You should always be slightly illogical about that, which is why insurance companies are so profitable. - Well, that's right. And exactly. So, you know, and here's the funny thing. I'm not against insurance. I think that insurance is a- - No, it's, yeah, it makes sense. It's just, we slightly overpay. Like we do that. It's just, it's a- - Yeah, that's true. - It's an economic behavior. We will always make that error. - Yeah, that's fine. No, no, no, no, no, that's fine. No, they're absolutely right. I mean, if it's a mistake, I'm making the same mistake. I mean, my grandmother, if she knew I was paying insurance, might be upset with me. Irrespective, I still think it has a place, but it doesn't really fit every characteristic of gambling because first of all, it's you're guarding against potential loss rather than a potential gain, and there's no buzz, all right? - Right, it's kind of a reverse buzz. - Yes, yeah. - The idea is that you're calming yourself down from sitting there, you know, laying there in bed at night thinking about, oh, what happens if I, you know, I don't know - Well, exactly, I mean, if I pass away, I've got life insurance. - Break my legs and I can't work. - Yeah, exactly, or if I mean, exactly if I'm unable to perform my job of my primary training or whatever the hell the definition is in insurance terminology, it's something like that. Your primary, whatever, who cares, whatever, insurance speak but you know, when I open a bill for insurance, I don't get warm fuzzies. I get like, oh God, again, did I just pay this? That's what it is. So no, not gambling. But I just wanted to throw that in there because my grandma was dead set against insurance. Anyway, all right. So. - Did she like gambling? - No, no, she was dead set against gambling. - Okay, so she just wanted a rational world. - Yeah, something like that. It's okay. Anyway, okay, so types of gambling. Now, this is not gonna cover everything. I know it's not, but it's going to cover that I think the big hit is. So, I've got a list here. So, I'm just going to run through the list. Races. So, horse races, the trots, cars, chuck wagons. 'Cause when I was in Calgary, they had chuck wagon races. - The chuck wagon races? - Yeah, they had chuck wagon races. At the stampede, the Calgary stampede. Anyway, so I saw the chuck wagons, I'm like, that's freaky. But anyway, it's also cool. It looked really dangerous, actually. - But really, that sounds really dangerous. - Yeah, I knew these things were going really fast and I'm like, if you fall off that, you're kind of gone. - Yeah, you're dead. - Anyway, any kind of competition in any kind of sport that you could think of, you know, football or soccer, right, 'cause they're two different things. That's the pause for people to stop the podcast and email me. There you go. We call it soccer, Hick. I'm sorry, can I sidetrack on this just for a second? - Do you guys call it soccer too? - We call it soccer, yes. - We always called it soccer. - Who was telling, my buddy, my friend was telling me, there's a good explanation of why it's called soccer. And damn it, I can't find it now, but it has to do with the name of a, oh, some club, I'm sure people will email you, but yeah, calling it soccer is the right thing to do. - Damn straight, it's soccer. Anyway, good. So getting back on track, any other kind of sport, I mean, even billiards, right? Or even cricket, yes, some people bet on cricket. - You can bet on anything - Yeah, or even chess - Especially if you have a problem - Yeah, well, that's true So then you got card games, okay, so that's the next obvious subcategory So you got blackjack, backerack, poker, bridge, those sorts of things - Here's where it gets interesting, now you can start counting stuff - Yeah Card counting is not permitted, but it's a good idea If you're Rain Man, you can really clean up Dice-based games, so things like backgammon, craps, roulette, kinda, sorta. It's not really a dice, but it's a spinny wheel with numbers, so, you know, kinda. Anyway. And of course, everyone's favorite, and I say everyone's favorite because it actually is everyone's favorite, is a slot machine. Or poker machines or whatever. Right. So, that's not an exhaustive list, but that's, you know, there's quite a lot of in there. So, lots and lots and lots of things. I'm not going to talk about all of them. I'm going to focus in on one specifically and I'll give you my reasons in a minute. But I did want to talk really quickly about Craps, not just because the name is funny. That's a teenage boy in me, sorry. As a quick side note about Craps, I just had to say this. It's always fascinated me as a game because I keep thinking, what if they weight the dice, right? Right. It's such a simple idea. And, you know, the dodgy casinos have done that. So, if you take that off the equation, out of the equation, if you assume that your dice are perfectly weighted or correctly balanced, whatever the terminology is, you know, they're not loaded, right, then the idea is that probabilistically speaking, if you set the dice in your hands in the same position and you throw them in the same orientation and manner repeatedly, then statistically you should get over an actually statistically significant number of rolls of the dice, you should get predominantly the same numbers. So you should be able to control that. Especially if you had a... well, I like this train of thought. I think about it in terms of basketball. Sure. It's like, you know, if you've got this big ball, it's relatively heavy, relatively large target you got ahead is like why can't people just hit this with consistency? Right? Like what's up with the human body that we introduce this much error into what's going on? It's got a crappy control system called the brain or something. Need to put a PLC in there. No, don't do that. Although, no, no, don't do that. But I mean, yeah, look, the other explanation is that I just suck at basketball and I'm not- Right, but even but guys that are really good still have a horrible rate That's that's why tall people prefer to basketball right because they can slam dunk and yeah And slam dunk is like yeah, I wonder if I'm gonna miss a slam dunk on my hands right next to the hole Hmm. Yeah, and I think I'm gonna miss that So it's like it takes all that You know you go for a three-point shot and you're way back from there and like you say the variability Why is that so hard to? But it I mean it interests me because you think about you know something like baseball and how consistently you know pitchers will put a ball You know a very small ball over you know over the the strike zone in a very high rate of speed much faster than a basketball I'm sure which I guess that probably is part of it right. It's probably more stability and flight possibly, but hang on You're playing baseball out, but that's outside right. There's way more chaos absolutely absolutely your wind wind changes direction all the time It swirls around a lot in those stadiums You never know where it's coming from and it whereas basketball you're in a fully enclosed Gymnasium or stay a stadium or something. It's always enclosed right Interesting. Yeah, I don't know. Well, okay Interesting. That's that's that's an interesting side topic, but okay, but just quickly about the dice then see that's the idea though If you were to repeatedly able to roll the same number that would give you a statistical advantage You could you could stack the odds in your favor, right? So of course casinos, well being casinos, they have thought about that of course and You can't wait the dice But what you can do is you can insist that the dice must hit the back wall of the craps right Thing what is it called? I never found the right name for it the craps board I guess but you know It's got like padded walls now the far end of the back wall That's coated typically with diamonds Don't have to be very yeah with sharp edges specifically to ensure that you get more random variability From each impact because statistically you're unlikely to hit exactly the same spot every single time Therefore that will more randomize Where the dice will land in each dice throw the chunking little flux out of the die every time that's it So the poor poor dice must get worn out But I was reading up on this and I'm like, that's interesting. So there you go. I just thought I'd throw that one in there. And-- - That's a lot of effort for a random number generator. - Well, we're gonna talk about random number generators. - Yeah, we're talking about RNGs. - Okay. - Random number generator. - Oh yes, yeah, random. Okay, all right. So I, however, have digressed too long and I now wanna focus on one thing in particular and that is the slot machine. And there's a specific reason that I wanna, you know, focus in on slot machines and it'll become clear shortly. So I'm assuming everyone knows what a slot machine is. You, the old style ones, you stick a quarter in or you know, whatever denomination, I suppose. And you pull a lever and a bunch of little rollers in front of you tumble away and go click, click, click, click into position. And if all the little symbols line up, then, you know, the right symbols line up, then you'll get a little tray at the bottom will drop out and a whole bunch of money will come out based on the size of what you've won. Of course, these days that's gone mostly, well, there are still places that have got those, apparently, so I'm told I haven't seen one in real life before, to be honest. I've only ever seen the digital ones. The first one was developed by a company called Stitman and Pip, and that was, they were from Brooklyn, in obviously the United States. That was the first of a gambling machine and it sort of evolved to become the slot machine. And that was in 1891. So, it had been around a while. But it was only it was three or four years later, Charles Fay was the guy that was sort of more considered the true developer because he had an automatic mechanism, which I looked into the mechanism and I'm like, I'm not going to explain it. But, you know, it just made the machines a lot easier to use. But the first video slot machine, you know, if you can call a slot machine now, it's video based that was developed in 1976 which is the year I was born and that was under the direction of Fortune Coin Company from I want you to guess what city they were from? They were from Las Vegas. Oh man you see you knew how about that? I know yeah that was so difficult. I know it was a tough one wasn't it? So yeah yeah it's like okay America you know cutting cutting edge of electronics development and Las Vegas. Yeah, okay. So, it's not that far from the valley though. Yeah, I guess it isn't really. I don't know how many hours drive that'd be probably about seven or eight hours drive maybe from the valley, I guess. Sounds about right. I went to Vegas when I was from, I drove from San Diego to Vegas. So, don't know about Frisco to Vegas. Gotta say Frisco, mate, because it sounds like I've been there and I'm like, "Hey, Frisco." Do people even call it Frisco? In Frisco? No, I don't think they like it when you do that. That's so, I'm just, I'm taking everyone that listens in San Francisco, I'm just pissing them off right now. Yeah. Okay, but I better cut that out then. I mean, like I'll stop saying it. I'm not cutting that bit out. Okay. All right. So, I'm going to talk a lot about the situation in Australia because it's dear to my heart, but you know, I also will talk a little bit more about the US as well. And there's also more to talk about in the UK, I've got a draw line somewhere. So I'm going to focus a little bit on my own backyard. But for people that are not based in Australia, this is still, I think, very interesting to see what's happened here. And it's kind of scares me a bit. So, all right. In Australia, we formally refer to them as gaming machines, poker machines, but the average person on the street calls them pokies, which if you've ever heard them called pokies before and says, Yeah, I just gone, you know, just had a play on the pokies. I can imagine that that might sound strange to someone that has no idea what the hell that is. It's like the pokies where you sit there and you get poked by something or somebody. So, it's Australia. Yeah, well, you know, we always walk around poking people with sticks. That's just, you know, it's like the boot from The Simpsons, right? We have the boot thing, too. Watch out for those koalas, they're going to get you. Anyway, drop bears, they call them. So, anyhow, it was legalized in 1956. and that was in New South Wales, so well after. This is slot machines, right? This is well after, you know, a lot of other parts of the world. So, and that was only in New South Wales, but within a few years, every other state followed, except for Western Australia. And this is where things get interesting. There was a Royal Commission held in 1974 in Western Australia into gaming machines. And I want to read a quote from this. And this is from a Royal Commission that was held by the government. So, reads like this. "Poker machine playing is a mindless, repetitive and insidious form of gambling, which has many undesirable features. It requires no thought, no skill and no social contact. The odds are never about winning. Watching people playing the machines over long periods of time, the impressionistic evidence, at least, is they are addictive to many people. Historically, poker machines have been banned from Western Australia, and we consider that in the public interest, they should stay banned. Pretty strong words. Yeah. They didn't like them, I guess. That's the brief takeaway. Mindless, repetitive. Yeah. Mindless, repetitive and insidious. Insidious, right? No, I don't think they liked them. No, I think they didn't, yeah, they didn't warm up to them. However, as is often the case when enough money is put on the table, in 1985, there was a consortium decided to pitch to the government the idea of building a casino. Of course, you know, big deal, but this was going to have poker machines and they needed an exemption to be written into the law in order to get them to have them. So, what they had was they had an old landfill that happened to be on an island in the middle of the Swan River, which is the river that goes through Perth, which is the capital of Western Australia. And in 1985, the Burrswood Island Casino opened, which at the time it was the third largest casino in the world. It's not anymore, but it was at the time. So when you put enough money on the table and you offer to build things like an 18 hole golf course and rehabilitate this and, you know, in other words, scratch the right backs, they bent the law, they changed and rewrote that section of the law so that they can have poker machines in there. Nice. And when I say nice, I mean, great. So anyway, so that remains the only place in Western Australia where you'll find poker machines. However, in the rest of Australia, they're everywhere. So, yeah, they're everywhere. So if I go into an RSL, which is a Returned Services League and there's probably a lot of people don't know what an RSL is. I don't know, but anyway, the point is it's kind of like a tavern/pub, but it's specifically tailored for for veterans. Oh, OK. And... VFW. Sorry? It's VFW in the US. Oh, OK, fair enough. Veterans Welfare Wards. I don't know if it's really a bar, but... Well, it's not a bar exactly. They're like private houses, right? Yeah, it's like this. It's... Think of... A club. Yeah, it's a club that you go to. It's got a sort of a dining area and it has a bar that you buy drinks from, but it also has a gaming lounge. And not just RSLs, taverns as well, so you'll go to a tavern, you can have like a counter or they call a counter meal, as in you get the served over the counter, you walk up to the counter, say, "I'd like, you know, chips and gravy or whatever and a steak and they'll give it to you. And it's cheap, you know, quality is questionable, but it's food and it's most analogous to a pub. And they also have a gaming lounge. And it's just crazy to me, so many places have them. And in Brisbane, a city that I live in, within an hour's drive, there are three casinos. Wow. Big ones. So, there's the Treasury Casino, there's Jupiter's Casino, and there's one up the coast. And the bottom line is that, yeah, just everywhere I look, you know, there are poker machines. We've got a lot more in Ohio now because we have a... They've started opening casinos up all over the place, but like not all over the place, right? There's a few big ones, but we have these little... We have the internet cafes, right? And so, it's everywhere, but it's still kind of shameful. It's always kind of hidden behind things. It's not out in the open. Yeah, it's very puritanical here. So, well, the thing is in America, different states have very different rules. I mean, no different to here. I mean, like I said, Western Australia, you know, but my... But as from state to state, it's all over the place. Yeah, it's spreading and it's getting worse and the same thing is happening here. 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So, I guess the next thing I want to talk about with poker machines is their return rate, which sounds a bit odd in the context of reliability, because in reliability, a return rate means how often a failed product comes back to you. But it's kind of weirdly analogous, actually, because when you think about it, I'm shoving money in, how much is returning back to me, right? So that's the idea right is the return rate is a percentage of how much money you get back from how much you put in statistically over a long period of time for a machine So any one machine and these things are now done all in software so there's no longer tumblers, there's no pulling the lever a certain way or whatever the heck people used to think they could do to change the odds the odds. Now these things have fixed odds they are calculated very coldly and precisely by code by someone's software and they have a fixed preset return rate and that return rate in Australia anyway is based on individual state laws and it varies between 85 and 90 percent. Now you might say I think that sounds reasonably good but the problem is if you're putting thousands of dollars through these machines, you're losing hundreds of dollars guaranteed pretty much every time. Right. So the current estimates, and this is where it gets scary, is that you consider that return rate. Now we start to talk about the numbers of the quantities of these machines that there are out there. Current estimate is that there are about five times the number of poker machines per head of population in Australia than there are in the United States. Five times. That's per head of population, of course. In terms of raw quantity, Australia is the seventh in the world for total quantity of poker machines. Now, our population is 23.5 million. That's really not huge. I mean, it's not statistically insignificant. It's a decent number of people. It's a heck of a lot more than New Zealand, but really, that's not a lot. And to be the seventh largest in the world, that's incredible to me. It's scary. But of course, one of the reasons that they've proliferated so much apart from the fact that the law is being quite open about it and of course the reason the law is open about it is because the government has their hand out because they tax it so all of these poke machines are being taxed now just to show the progression I thought it might be instructive to look at a figure from about 12 years ago so in the financial year 0203 and so 2002 2003 because we split our financial years from mid-year for reasons I don't actually understand but anyway whatever they turned in four billion dollars in revenue in 2002 2003 financial year now we go to 2010 2011 that number is up to 11.2 billion Australian dollars in tax revenue to the government now in recent years due to the tail end of the GFC and so on, that number has reduced, but it is still above $10 billion a year. So, obviously, the government aren't really all that concerned with tightening the thumbscrews on poker machines because it's a huge revenue earner for them. Yeah. Which you know is scary. Now, what's even more scary is if you look at the revenue that the government gets out of taxation from all forms of gambling. So this is now everything that I mentioned earlier and more, which is like horse racing, you know, any form of, you know, anything in a casino at all that's gambling, I guess, unless they tax you walking to the bar, which, you know, they probably would if they could. But the point is that the revenue the government takes from poker machines alone accounts for 60% of their overall tax revenue from gambling, which obviously therefore makes them the biggest single income earner from all forms of gambling. That 60% of the total comes from them alone. So they're not exactly going to be all that keen to regulate them out of existence. So now, just quickly, we'll talk a little bit about the US and in the US, there are actually a lot of states that have banned them. Most famously, however, Nevada, and Atlantic City specifically, have much more relaxed restrictions and therefore are considered sort of the two gambling, I guess, meccas, if you will, in the States. And a lot of people look at Atlantic City as the poor cousin of Las Vegas. You sort of you go, I believe that perception and maybe you can correct me, you know, but is that Atlantic is sort of the poor. So, you go to Atlantic City if you don't want to go to all the trouble of going to Las Vegas. And it's just not as glitzy, but you can still gamble lots of money there. That's sort of my impression. Does that sound about right? Well, it's also on the East Coast, right? If you're, like I said, it's much more convenient. Yeah, exactly. You don't fly for four hours. It also has a, I don't know, it's a different vibe. Yeah. I guess. Well, if you want that. There's lots of neon. If you want that run down East Coast vibe. Oh, dear. Does Ohio count as East Coast? No. We're Midwest. Yeah. The lakes. They are beautiful, I will say. But still. They're not burning. What's that? And they're not burning. They're not burn... No. Oh, you don't know about the time the Ohio River caught fire? The river caught fire? No. Twice, actually. The Cuyahoga River caught fire in Cleveland. Wow. In the 60s. It was so polluted that you drop a match in it, it would flare up. Oh, my God, that's terrible. Okay. It's a lot nicer than it used to be. Yeah. Wow. Okay. Well, okay, good. I'm glad it's a lot nicer than it used to be. There's an... while we're talking about poisoned rivers... Well, that's the upside to de-industrialization, right? Oh, sure. Now you can go swimming again. Yeah, but you're absolutely sure? I mean, what's the pH? But, I mean, there's a river in Tasmania. I think it's the Gordon River, I think. I probably got that wrong, but anyway. There was a place called Queenstown, and Queenstown had a massive... I think it was a copper mine or was it a gold mine? It was one or the other. And the tailings from the mine, while they're processing, they used arsenic, I think it was. And arsenic, of course, is one of those friendly compounds that, you know, is kind of poisonous to a lot of living organisms. So, the tailings were, you know, let's just dump them in the river. Why not, right? And essentially, mining stopped there, there, something ridiculous like 40 years ago or more. Well, the whole river is a very disturbing shade of brown and the mud and the clay soils in the river bed have got so much arsenic in them. They're saying that it's going to take another 150 years before it'll actually be cleaned enough and rinsed out enough, diluted enough to make it safe to actually swim in it and for life to return to it. It's horrible. I mean, Tasmania is a beautiful place and then you come across this and you look at it, I'm looking at that river and I'm like, that is so unnatural that it is... I consider myself a tree hugger, okay, but it's heartbreaking watching that, looking at that. Anyway, what's that got to do with gambling? Nothing. So, I should probably get back on topic, but still. Yeah, scary looking rivers. Don't like matches. Okay. So, the counter argument that I've heard from a lot of people that enjoy playing poker machines is that poker machines aren't about winning, apparently. They're about entertainment. So, the argument that I've heard is, if I spend an hour or two gambling away $50, and let's assume you can make $50 last an hour or two, right? assuming you can. I could probably spend the same amount of money at a movie theater on a ticket and some popcorn and a drink probably over a similar kind of time period. I don't know if that argument is flimsy or not but you know let's just assume you could make 50 bucks last that long and let's assume that it's an expensive cinema complex but then again you know here it costs 17 bucks to see a new release movie in a lot of movie theaters. What's it like over there where you are just seeing movies. 10-12 bucks. Yeah. Here's a ripoff. But you know most of the movies we get you know are from America. Yeah they got to move those bits all the way over there. Yeah man that's expensive those bits are heavy oh yeah. So I gotta come over on a boat sometimes takes like three months to get. Like each of the container ships right like each yeah each one of those boxes. Damn right man I mean the Lego movie yeah I eat they took the long way around man they weren't allowed to use the canals it took three months to get here. Anyway... They're building an iTunes complex there. A shipping center so they can start moving iTunes in and out. Oh my God. Do you guys still have Netflix? Do you have Netflix yet? No, we don't. No. No. Yeah, I know. What the heck? I want to... Okay. Yes. I'm always angry. That is an anger that's always simmering in the back of my brain and you've successfully brought it out. Have you done a show on that yet? I've done a show about streaming versus downloaded. I did that with Josh Senses and- Right. But that was not really specifically about digital distribution and how just just so messed up and how it just makes me very stabby and I should stay away from sharp objects. What is it? Is it region code? Region code. God. Okay, you know what? I've got so much pent-up rage, I'm definitely going to talk about that at some point. So I'll get you back to talk about the pent-up rage. You're getting, you're good at dragging, drawing this out of me. Okay, I'll go back on topic. All right. So the people that argue that poker machines are a form of entertainment and you know, I'm not saying that they're not. Sure they are. That's fine. The thing is though, going back to the movie analogy, and okay, fine, we have expensive movies and really, really expensive popcorn apparently. Anyhow, the stimulation provided by a poker machine and the risk/reward reinforcement exists on a poker machine, but it doesn't exist in a movie. It just doesn't. I mean, if it was a good movie, I guess. Does that encourage you to go back and see more movies? Well, I don't think so. I think that the environment and the enjoyment of going to see a movie, irrespective of whether it's good or bad is what takes you back, but you don't get positive reinforcement. You're sitting in the seat and the seat isn't giving you some kind of back massage and saying, "Thank you for coming to the movie theater," or something like that. The wrist, man, that's a creepy image. Anyway, it's not likely to become an addictive behavior, whereas— Well, you're not going to have that instant feedback, right? You're not going to have those dopamine squirts just boom, boom, boom. Yeah, exactly right. Because you could get out of that game. That's it. Okay. So, because the analogies are getting creepy, I'm going to leave that right there. However, the law of averages, and I love saying the law of averages, because that's a nothing statement statistically, because what's the law of averages? Anyway, never mind. The law of averages, oh God, I just said it again. Statistically, you can never win. If you gamble enough over a long enough period of time, I guarantee you, you will come out behind. You will, you must statistically, you have to. So, if you spend a dollar a day over any significant period of time, even a month, you will walk away with less money if you actually would account it. That is a guarantee for the vast majority of people. There will be outliers such as yourself, for example, where you are ahead. Congratulations. Never gamble again. I've played so little, I think, right? As soon as I win, it's like, "Okay." Yeah, so don't gamble again, right? Ever. Get lucky early on. Yeah, but stay ahead, right? That's it. Stay ahead. I just need one more to stay ahead. The gambler's... Yeah, the logic there doesn't actually work. No, it doesn't. That's it. So, this is the beauty. I just got lucky. Yeah, that's right. And this is the beauty of it, okay? They call this the gambler's fallacy. And when I first read this years ago, I thought, "Oh, yes. This sums it up perfectly." Where a success in a single event... This is the belief, okay? Where a success in a single event affects the outcome of future events either positively or negatively. hence, after a win, there is an expectation that there will either be more wins or less wins as a direct result. So, if I've got a whole bunch of, you know, "Yeah, I won. Yeah, I won. Yeah, I won." There are people that believe that they're going to continue. They're on a winning streak. They're on a hot streak, right? And that's completely false. And that's hence the name of Gamble's Fallacy. And the best way to illustrate it is to do a little bit of statistics. Hey, who loves statistics? Mind you, if you've survived this long through the episode, then maybe you do like statistics. And you're expecting it to start... Did you just say you like statistics, Ben? I said you might be liking statistics. Oh, maybe. Well, we haven't done that much math yet. No, I haven't done any math yet, but I'm about to break that right now. So, embracing yourself there. Okay, fingers and ears. No, sorry. Okay, here we go. Tossing a coin. I love tossing a coin because it's such a great example. example. So, everyone's got a coin. Well, I'm assuming everyone's used a coin. Okay. 50/50 chance of being heads. And that's yet another joke because not every coin has a head on it. But let's just assume for a moment that we're talking about two sides. One side is cool. And it might land on its side. It might land on its side. That is statistically possible. So, let's assume. Doesn't happen enough in movies. It needs to happen more. Well, you write a letter into them and you see that they do something about that, Ben. Yeah. Uh, on a... Oh God. Okay, so the probability of tossing... Okay, heads or tails, 50/50 chance. This is a perfect coin. In other words, in the business, they call it a fair coin. In other words, it's not weighted. You toss it a hundred times, 50 times it'll be on heads, 50 times it'll be on tails, zero times it'll be on an edge. Thank you very much. The probability of tossing a head, therefore, if you do it once, is one half. Or expressed in different terms, one in two. So you have a 50/50 chance, a 1 in 2 chance, a probability of 1/2 All means the same thing Now if I then keep tossing that coin, 2 in a row is hence 1/4 Because if you add them all up, there's 4 possible outcomes You could get 2 heads, you could get 2 tails You could get 1 head and 1 tail, or you could get 1 tail and 1 head If you're counting the sequence So to get 2 heads, you've got 1 chance in 4 So you have a probability of 1/4 Okay, so let's do something insane Let's try and get 20 in a row The number, probabilistically, statistically is you have a 1 in 1,048,576 chance of getting 20 heads in a row Now after the 20th heads in a row You're gonna think, man, I'm so likely to get that 21st head aren't I Oh, yeah, no the probability of your next toss being a head or tail considered in isolation is still only one in two nothing changed Hopefully that's clear, but if you're not getting it there's a link in the show notes feel free to read up on it but essentially gamblers fallacy is Distortion of reality it's not you know there is no such thing as a hot streak or a winning streak There is no such thing. I'm sorry when it comes to statistics. They're just this isn't So, poker machines make sounds and they irritate the heck out of me, but... You know, actually it's funny. I went to that casino up in Cleveland and those sounds can almost put me into a trance. Yeah, that's right. It is bizarre. I don't know what words to even use, but you can almost just feel this electrical energy. energy of all these people, all these desperate, sad people, just putting all this, this, this, you know, mental energy into hoping that these machines make the right sequence of numbers come up. That's right. And, and you could, I don't know, I could feel it. It was bizarre. You can, and it is a fear. I get exactly the same kind of feeling and it's hard to get the right word for it. It's, it's, it's, it's like a strange level of energy. It's... Right. It felt like, it felt like you were like having some sort of psychic experience with these machines, right? Is that kind of bizarre? It's almost like when you're moving through the poker machines is like this. I don't know. God, this sounds so non... Well, it just it feels like you're almost a little bit fuzzy. It's like it's so hard. Well, they pump stuff in there. I mean, they try to get you high. Oh, yeah. So, and that's the point is that these sounds, the sounds of winning a bet in particular, they have been carefully engineered to be very pleasing sounds. Right. And they've, make no mistake, they have spent millions and millions of dollars refining those stupid sounds. And you and I will say there's something about it, I can't quite put my finger on it. Well, someone put their finger on it and they put it in that machine. OK, people smarter than us have figured this out. And the sounds of a winning bet are drawn out of a long period of time relative to the period it takes to have a standard bet. So, if I push the button and I bet one line, so I bet one line and it comes up and it goes, "Blip, blip, no, didn't win. Great." Hit the button again. That whole time period is maybe a few seconds. But if you win, so let's say you're betting a dollar on every line, you got 50 bucks. So, you bet five lines, you've spent $5. So, their $5 are gone now, but then on the sixth spin, I win $4 back. Great, that's fantastic. I've won and that gets drawn out over like 20, 30 seconds. And it's playing stupid music and you got little coins, little pictures of coins coming up, a little fountain in front of you and it's like, "Oh, pretty." And it's like you're looking at this and it's like, that's the positive reinforcement. You've won. You've won. And if you're in a casino, there's hundreds of these things, right? Oh, yeah. All going on. You're hearing the winning sounds way more often than you're hearing the losing sounds. - Yeah, 'cause you sit there and you listen to other people winning and you're like, "Oh, that's gonna be me soon." - Right, the general tone of the place is it's a major chord, right? It's just, "Oh yeah, this is happy." - That's it, I'm happy now and that's it. So the whole thing is though that the joke, not joke, the reality is that you've only won back $4 but it costs you $5 to get that $4, but you feel like you've won. So you keep playing. - Now you're on a streak. - Yeah, I'm on a streak now, you keep playing. So the funny thing about the sounds is that I found there's a whole bunch of studies have been done on this. None of this is news, none of this is new. This has been a well-studied, well-known, well-understood phenomenon. What gets me is the number of people that don't understand how they're being manipulated, how these machines and the way they've been programmed, the way they're set up, the statistics of it, they don't understand that all these studies have already shown things like, for example, if you turn the sound off on these machines, you are likely to spend less money. Now, there've been studies where they've done this. They've done testing with different groups of people in different age demographics in different countries around the world. Now, I've linked to just one of them, which was a Canadian study. and I don't want anyone to suggest that that therefore makes it less relevant because I've been talking about Australia and Canada is bigger than Australia. Point is that that was a really good study because that one specifically tested sound on sound off with a large group of people and I thought it was very interesting. So have a read there's also a there's also a white paper, it was a white paper sorry it was a research paper done on it and it was it's very very good reading So I strongly encourage you to read those. The links are in the show notes. So, yes, the sounds affect you. The way that they structure the game entices you to spend more. None of that should be a surprise. Ultimately, you're going to walk away with, at best, maybe 90% of what you went in with. And that's at best, because that's all these machines are going to pay out at. The trick, so I'm told, is to walk away when you're ahead. OK, what's to stop me ever going back? So, if I go back and then I spend my money, I'm no longer ahead if you consider it over a long enough time period. And this is the thing, is that people think about it in small slots of time. And speaking of time, there was a... Oh, geez, it was 10, 15 years ago, I couldn't get a nail down on the exact date. But in Australia, up until not that long ago, about a decade ago, something like that, time wasn't shown on the screen, like as in the time of day. So it wasn't shown on the screen. And they brought in a law that mandated that you had to show the time. Guess where the time is? It's tucked away in a corner and it's in the smallest goddamn font they could possibly pick, but it's there. It's not quite magnifying glass small, but it's like, yeah, I'm looking at the time. - It's so evil, but God, you gotta love it, right? Like they're so insidious. - It's insidious, exactly. Just like that quote from the tribunal. - Mindless and mindless repetitive and insidious. - Yeah, exactly. says it all. It sums it up so beautifully. The guys coming up with it aren't mindless. The people that have come up with this, they found the perfect way of separating your money from your pocket. It's incredible. It's even more efficient than Apple. Sorry, I just offended. I don't know. You walk into the store there and maybe you just can't hear them. Well, you hear them. These days, you walk into an Apple store and you're lucky to get served. But anyway, sorry, I'm sidetracking myself again. But the whole time thing is just one example. I mean, and a lot of people know the tricks, okay, that casinos have got. And of course, that is, they don't usually have clocks around the place. All of the windows are all darkened and the lighting is low so that it looks like the same time of the day or night, 24 hours a day. So, you lose track of time. How long you've been there? I don't know, 20 minutes? No, you've actually been there three hours. You know, you can't notice time passing because we human beings, you know, we take you from the sun, right? So take the sun out of the equation. You're living in a box, carefully crafted, comfortable box where you can give your money to the casino. How do you think casinos are so successful? Why do you think people want to keep building casinos? Why do you think the government wants people to have access to poker machines? Why? Because it's a way for them to raise money, lots of money. It's not about winning. It never is. And you never can statistically. So if after listening all this way in and you still love gambling, that's great. But I would strongly recommend playing either Blackjack or Craps because I'm not gonna go into all the details why. Again, plenty of articles and there's a few links in the show notes. They are statistically the two casino games that will give you the best possible odds. However, ultimately over a long period of time, it is never possible to win more money than you have put in. It just isn't. And if you want to go and say to me, you know, John, there's this guy in Nantucket who happened to win a million dollars. That's great. Okay. I'm happy for him. But let's just be honest. There are maybe only a few dozen people in the world who can actually say that. And I've known people that have had severe gambling problems. And although I didn't lose their house. I'm going to draw a friend of a friend here, but a friend of a friend did lose their house from a gambling addiction. People you see in the paper in the public service, I've seen there's a-- just a few weeks ago here locally, a woman who was in charge of some of the invoicing at a government department lost her job and owed some insane amount of money, hundreds and hundreds thousands of dollars that she'd misappropriated and it all went into gambling and I stop and think every time I see those sorts of figures like 10 billion dollars of tax revenue how many how many lives have actually been ruined to make that money right now how cold and how ruthless is that the bottom line though is it's kind of like well alcohol it's kind of like fast food it's a choice so I can't stop you from doing it and freedom by its basic definition means that you shouldn't restrict people from doing the things that they would choose to do so I'm not suggesting that I don't want to live in a society where everything is regulated and the thumb screws it down and there's you know Gestapo on every corner and you can't gamble you can't drink you can't eat fatty foods whatever that's not what I want what I want is for people to appreciate and understand the numbers understand the probability the statistics the mathematics behind it understand the way that casinos and poker machines in particular manipulate you if you understand it I guarantee you you're not gonna like it anymore or if you are you're not gonna like it anywhere near as much and that's I think the best defense against losing money to these bloody machines. So, honestly, yeah, I guess this has been a soapboxy episode, hasn't it? Nah, it was fun. It wasn't too bad. I think people that enjoy gambling that don't have a problem would have no issue with any of this. I don't have an issue with people... For me, what bothers me about it is the government involvement, right? It's that an organization that's ostensibly about protecting and serving everybody is going to take money from one group of people and spend it on behalf of another when you know that the group of people you're taking it from are acting kind of irrationally. Right? Absolutely. Which, I mean, around here, the lottery is kind of the big thing. all that money supposedly goes to the schools and of course, somehow the schools always end up still being broke. Whatever money they make from the lottery just ends up coming out, you know, they just won't keep up with the taxes then, right? Like yeah, it just, it's... Yeah, I know, and that's the depressing part, is the problem with... Because if people do have a real problem, like they're going to gamble anyways, right? You don't have to make it, you don't have to, I don't know. It's something for me changes when the government gets involved. Yeah, absolutely. And I guess that is my biggest issue is the fact that ultimately, what's the expression? Whoever has the gold makes the rules. And honestly, the government has a huge amount of money and they can get more money by supporting gambling, generally speaking. So, whenever I come across a state like Western Australia where they banned it, I have hope for the future. And then they build a damn casino. And I'm like, "Oh, my faith in humanity just got squashed again." But then I, you know, older I've gotten, I thought to myself, "Look, you know, it's a choice. It's not right for me to say you can't do something, all I can do is try and educate people and say, you know what, here's a list of really sensible, logical, rational, dare I say, pragmatic reasons why you should spend your money somewhere else other than in a poker machine. And, you know, if one person comes away from this that used to play these things and then realizes that after listening to this, you know, I'm not doing it again then it's been worth the discussion. So that's why I wanted to approach it anyway. But if you still enjoy gambling, go right ahead. I mean that's not a problem, it's your choice and that's the great thing about freedom is that you have the choice to do what you want, when you want, how you want. So go for it but just remember what you're doing and remember that the numbers, the odds are always going to be against you. And that's all I really got to say about this. So yeah, might leave it there. If you want to talk more about this, you can reach me on Twitter at John Tidgey and check out my writing at techdistortion.com. If you'd like to send any feedback, please use the feedback form on the website. And that's where you also find show notes for this episode under podcasts pragmatic. I'd personally like to thank lifex for sponsoring pragmatic. If you're looking for a great LED bulb, that's energy efficient, remotely controllable, colorful, and just Plainfund to use, then remember to specifically visit this URL, lifx.co/pragmatic and use the coupon code pragmatic for 15% off the total price of your order. I'd also like to thank my guest host, Ben Alexander for being on the show once again. And yeah, it was and I I'm in a quandary because I realized that you're taking a break from Twitter. I normally ask how What's the best way for people to get in touch with you? You can't. You can't? No. Well, then- You need to know my email, which, no, well, I guess it's too bad. This makes for a rather different ending to the show. I'm going to say if you want to get in touch with Ben, get in touch with me and I'll pass it on. Does that work? Why would you want to do that? Come on, Ben, people love you, you know that. All right. Yeah. That sounds good. Awesome. Okay, let's run with that. Thank you, everyone, for listening and thanks again, Ben. Thank you. [MUSIC PLAYING] (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) [Music] (explosion) [BLANK_AUDIO]